If the price prevailing in the market is above the equilibrium price, the market supply will exceed the market demand. This creates a situation of excess supply in the market. Firms will not be able to sell the quantity they wish to sell, so they will lower the price. As the price falls, quantity demanded rises and quantity supplied falls until equilibrium is restored.

If the price prevailing in the market is below the equilibrium price, the market demand will exceed the market supply. This creates a situation of excess demand in the market. In response to this shortage, some individuals will be willing to pay higher prices, causing the price to rise. As the price rises, quantity supplied increases and quantity demanded falls until the market reaches equilibrium.